NEW YORK — Tiffany & Co. Wednesday posted nearly a double-digit gain in first-quarter profits, despite a larger leap in expenses.
For the three months ended April 30, income jumped 9.6 percent to $35.9 million, or 24 cents a diluted share, from $32.7 million, or 22 cents, in the year-ago quarter. Selling, general and administrative expenses rose 15.4 percent reflecting, the company said, “ongoing store expansion and business development spending as well as higher spending for advertising, depreciation and insurance.”
Sales shot up 14 percent to $395.8 million from $347.1 million. U.S. retail sales were up 5 percent to $173.6 million compared with $165.7 million in last year’s quarter, while same-store sales inched up 2 percent. Sales at U.S. branch stores gained 3 percent but Tiffany’s New York flagship registered a 5 percent decline. International sales also rose, jumping 12 percent to $165.5 million from $147.6 million.
The firm’s direct marketing sales were up 10 percent to $37.3 million versus $33.8 million last year. Gaining strength was the combined Internet-catalog sales business, which climbed 22 percent. The luxury jeweler’s October acquisition of Little Switzerland helped generate $19.4 million in specialty retail sales.
Michael J. Kowalski, chairman and chief executive officer, said in a statement, “We view these results as confirmation that, despite external challenges during the quarter, Tiffany’s consistent focus on its proven, long-term growth strategies is sound.”
The ceo added that the company was on track with 2003 expectations, which include a low-teen percentage increase in annual net sales. Tiffany’s earnings per share guidance for the year is between $1.33 and $1.38.
Mark Aaron, vice president of investor relations, said during a conference call that U.S. sales reflected growth in engagement jewelry and higher-ticket fine jewelry. “We continue to see increased demand for jewelry in the $50,000 and over category,” he noted. Sales in the china, crystal and the flatware and accessories categories were soft during the quarter.
Commenting on the impact of SARS, Aaron said sales rose in Japan — its biggest Asian market — were “good” in Taiwan and in Australia, but declined in Singapore. In Hong Kong, sales rose 1 percent in the quarter, despite SARS, and declined “only 9 percent in April,” he said.
James Fernandez, chief financial officer, said the firm will open a new customer fulfillment center in Hanover Township, N.J. in the fall, handling direct shipments to customers. The existing fulfillment center will become dedicated to store replenishment.